Justices say methods used to determine coal property values don't violate state Constitution

By Kyla Asbury | May 2, 2019

CHARLESTON – The West Virginia Supreme Court of Appeals recently ruled that the methods used under sate code to determine the value of coal properties does not violate the state Constitution.

"The circuit court concluded that the method of valuing coal properties as prescribed in the Code of State of Rules violated neither the statutory requirement of assessment at 'true and actual value' nor the constitutional equality requirements of Article X, Section 1 of the West Virginia Constitution and the Equal Protection provisions of the United States and West Virginia Constitutions," the April 29 court opinion said.

Justice Margaret Workman authored the majority opinion affirming the ruling by the Marshall County Circuit Court. Justice Evan Jenkins dissented and authored his own opinion.

Court filings said Murray Energy Corp. and Consolidation Coal Co. own coal interests in Marshall County and their interests are appraised for ad valorem tax purposes by State Tax Commissioner Dale Steager and assessed by the Marshall County Commission through its assessor, Christopher J. Kessler.


Workman  

The State Tax Department utilizes a “statewide mass appraisal system” for valuation of active and reserve coal properties and uses certain averages for purposes of valuing the coal interests through the mass appraisal system.

The state Steam Coal Price Per Ton (SCPPT) for the 2016 tax year was challenged by the petitioners, Murray Energy and Consolidated Coal. They argued the methodologies and averages used to come up with the price didn't reflect the "true and actual" value of coal properties and that it caused their properties to be over-valued.

The board denied the arguments and the petitioners appealed to the Marshall County Circuit Court, which ruled that the state Constitution provides that "value" is "to be ascertained as directed by law," and that the petitioners failed to establish that the State Tax Department's calculations were inaccurate. The petitioners then appealed to the Supreme Court. 

The Supreme Court found that the methodology’s design sought to even out "the extreme ends of the coal pricing curve" and that the methodology was unquestionably applied uniformly across the coal property tax base.

"We therefore conclude that the valuation methodology contained in West Virginia Code of State Rules § 110-1I- 1 et seq. for the calculation and use of an average Steam Coal Price Per Ton and average coal seam thickness does not violate the equality provision of West Virginia Constitution Article X, Section 1 or the equal protection provisions of the West Virginia and United States Constitutions," the high court opinion said.

In his dissenting opinion, Jenkins said he felt the majority condoned the adoption of methodology that essentially ignored "the erroneous property valuations that have resulted from its application."

"Because I disagree with the majority’s resolution of this matter, I respectfully must dissent," Jenkins wrote.

Jenkins said he could not agree to such "blatant departure from the constitutional and statutory commands that property be taxed at its 'true and actual' value."

West Virginia Supreme Court of Appeals Case number: 18-0018

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